The HKMA warned about crypto firms labelling themselves as banks. The SFC warned about a crypto firm called JPEX which falsely claims to be licensed.
The HKMA (Hong Kong Monetary Authority) on Friday (15 September) issued a press statement warning members of the public against dealing with crypto firms who label themselves as “banks” or describe their products as “deposits”.
In the statement, the HKMA said crypto firms describing themselves and their products in this way might be a contravention of the Banking Ordinance. Examples include instances where crypto firms describe themselves using terms such as “crypto bank”, “crypto asset bank”, “digital asset bank”, “digital bank” or “digital trading bank”, or claiming to offer “banking services” or “banking accounts”.
The HKMA also noted that some crypto firms are using the term “deposits” to describe funds placed with them by clients, or promoting “savings plans” as “low risk” with “high return”. The regulator said the use of such terms and descriptions might mislead members of the public into believing that those crypto firms are authorised as banks in Hong Kong, which they are not.
Under the Banking Ordinance, only licensed banks, restricted licence banks and deposit-taking companies (collectively known as “authorised institutions”), which have been granted a licence by the HKMA can carry out banking or deposit-taking business in Hong Kong.
“Other than authorised institutions, it is an offence for any person to use the word ‘bank’ in the name or description under which they carry on business, or make any representation that they are a bank or carrying on banking business in Hong Kong; and it is also an offence for any person, to carry on a business of taking deposits in Hong Kong or invite members of the public to make any deposit.”
The HKMA’s warning comes on the heels of a warning from the SFC (Securities and Futures Commission) about an unregulated VATP (virtual asset trading platform) known as “JPEX”, which claims on its website that it is “a licensed and recognised platform to facilitate the trading of digital asset and virtual currency”.
JPEX also claims on its website and local advertorials to have obtained licences from certain overseas regulators to operate VATP, which is “in fact not true”, the SFC said, adding that it has received complaints from retail investors who were unable to withdraw virtual assets from their accounts maintained with JPEX.
The SFC said JPEX has been actively promoting its products and services to the Hong Kong public through social media influencers and “key opinion leaders” as well as OTC virtual asset money changers, and that it “wishes to make it clear that no entity in the JPEX group is licensed by the SFC or has applied to the SFC for a licence to operate a VATP in Hong Kong.”
“The SFC will not hesitate” to take enforcement action against individuals and entities who fail to abide by the VATP regime,” the regulator said.
Last month, the SFC warned about unlicensed VATPs engaging in “improper practices” such as falsely claiming that they have applied for licences when in fact they have not, or launching virtual assets for trading by retail cllients, trading services in virtual asset derivatives, or arrangements such as virtual asset “deposits”, “savings” or “earnings” – all of which are not allowed under the VATP regime.